The death of some “big guys” in the fisheries sector in Can Tho and Soc Trang provinces has sounded an alarm about the financial situation imbalance, which may lead to the bankruptcy of a lot of seafood companies and fish farmers as well.

Due to the lack of capital, seafood companies buy fish from farmers under the mode of deferred payment, which means that they try to use farmers’ capital for their business. Meanwhile, farmers have to borrow money from banks to pay for feed and other kinds of farming expenses. Many of them have become bent with the sky high interest rates.

Analysts have warned that if commercial banks stop disbursing money at this moment for fear of the risks, this may lead to the collapse of a series of seafood companies and farming households.

The fisheries sector is in danger

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), the establishment of a series of tra fish processing factories in Mekong Delta has not only caused a big waste to enterprises, but also led to the imbalance in the material supply and demand. The unhealthy competition among the companies, plus the capital shortage, have both made them suffer.

Also according to VASEP, 80 percent of tra fish companies have to reduce the processing capacity, while many enterprises have shut down.

The US remains the market which has the highest demand for tra fillet products and offers good prices. However, some Vietnamese enterprises still bear the high anti-dumping tax rates of 53-63 percent when exporting their products to the market. Meanwhile, Vietnamese exporters have been warned that they would meet bigger challenges when competing with the products from Cambodia, Thailand, Malaysia and Bangladesh which now attempt to reach out to the world market.

Meanwhile, the enterprises have been attacked by big difficulties from all sides. The aquaculture feed has increased by 16-30 percent over the last year. Meanwhile, enterprises have to pay money for many other kinds of expenses, including the fees for certificates, food hygiene inspection and taxes. The electricity and fuel price increases have also led to the higher production costs, thus lessening the competitiveness of Vietnam’s tra fish products. The policy on tightening credit has also distressed farmers and processors.

The insolvency is in sight of many businesses

Some bankers have warned that the enterprises with weak financial capability which have been relying on bank loans would fall down in the current difficult circumstances.

In An Giang province alone, there are 17 enterprises which are running 21 seafood processing factories with the average capacity of 12,500 tons per day. However, the factories are thirsty for materials. Some processors planned to develop the material growing areas themselves, but their plans have not been fulfilled. The fish ponds developed by enterprises just can account for 34 percent of the total aquaculture area and provide 61 percent in output.

Meanwhile, processors now cannot collect materials from farmers, because farmers fear that the processors would refuse to pay debts like Bianfishco did to its fish suppliers.

Le Van Sen, a farmer in Chau Phu district of An Giang province, said that he once became penniless two years ago, when an enterprise refused to collect fish as promised. Sen then signed a contract with Bao Vinh Company in Kien Giang province under which Bao Vinh would buy 120 tons of fish, worth 1.4 billion dong.

However, Bao Vinh only paid 200 million dong to Sen and never returned. As a result, Sen had to sell his land to make payment for due debts. “I still owe 190 million dong to the banks, though I have sold every thing I could,” he complained.